Ottawa unveils plan to phase out oil-fired furnaces and support heat pumps | CBC News

The federal government says it has a plan to start phasing out the use of oil-fired furnaces in new construction and get homeowners and businesses to switch to heat pumps over the next several years.

The finalized Canada Green Buildings Strategy, which is being released today, outlines Ottawa’s priorities for decarbonizing buildings — the third-largest source of climate-altering carbon emissions in Canada.

The strategy does not target natural gas and propane heating sources. While the document doesn’t explain in any detail how Ottawa means to phase out oil-fired furnaces, Energy Minister Jonathan Wilkinson said the federal government intends to use regulations and investments to encourage the switch to heat pumps.

“We will be moving to ban the use of heating oil in new construction. And that simply reflects the fact that there are lots of alternatives to heating oil,” Wilkinson told CBC ahead of the strategy’s release.

“Heating oil is enormously expensive, and it is the most polluting fuel that we use to heat our homes.”

Strategy focusing on new construction 

The Canada Green Buildings Strategy commits the government to introducing a “regulatory framework that will allow the phase-out of the installation of expensive and polluting oil heating systems in new construction, as early as 2028.”

Heat pumps — which use electricity and don’t burn fossil fuels — are more efficient than traditional indoor climate control because they transfer warm or cold air instead of generating it.

The buildings strategy document says some heat pumps can warm a house even when temperatures fall below -30 C, and cool it when temperatures exceed 40 C. Heat pumps are often coupled with back-up heating sources for prolonged periods of severe cold.

Heat pumps are more energy efficient than oil furnaces, don’t release toxic fumes and don’t cause costly oil spills. The price of heating oil is also vulnerable to global price shocks.

Bringing costs down

But heat pumps also come with considerable upfront costs. According to Efficiency Canada, the average cost of a heat pump in Canada is $18,400, while the average price of an oil furnace with a tank replacement is $6,500.

Wilkinson has said that affordability programs the federal government is co-delivering with some provincial governments can bring the cost of heat pumps down.

Through the Oil to Heat Pump Affordability (OHPA) program, homeowners can receive a maximum of $15,000 to install a heat pump — but only in British Columbia, Newfoundland and Labrador, Nova Scotia and Prince Edward Island, the provinces where the program is co-delivered by the federal and provincial government.

More than a million homes in Canada are heated with oil, most of them in Quebec, Ontario, Nova Scotia and British Columbia.

While the strategy offers few specifics on how the phase-out would work, it says it would include “necessary exclusions” for places with insufficient access to electricity, or where backup standby heating is required.

The strategy is meant to serve as a “federal backstop,” the document says, since Quebec and Nova Scotia have both committed to banning the installation of oil furnaces.

After the oil and gas and transportation sectors, buildings are the third largest source of greenhouse gas emissions in the country according to Environment and Climate Change Canada. In 2022, their emissions totalled 89 megatonnes, equal to the emissions from 201 million barrels of oil. 

Canada national greenhouse gas emissions have been on a downward trajectory since before the pandemic began in 2019.

But to hit its emissions reduction targets, the country will need to see sustained reductions of as much as 45 per cent below 2005 levels by 2030.

The federal government has vowed to slash emissions in the buildings sector by 37 per cent below 2005 levels and then achieve net-zero in the sector by 2050.

The need for retrofits

Most building emissions come from air conditioners, furnaces and boilers. Switching from fossil fuels to electric heat pumps could significantly reduce buildings’ carbon footprints.

The strategy singles out the need to retrofit existing structures to make them more energy efficient, with a focus on the residential building stock. 

WATCH | How much can heat pumps reduce your carbon footprint?

How much can heat pumps reduce your carbon footprint?

Ottawa is giving Atlantic Canadians more time to switch to heat pumps. Last week, the federal government announced it would pause the carbon tax on heating oil for three years. CBC Nova Scotia’s Amy Smith spoke to Dalhousie environmental studies professor Wayne Grosko about the impact.

“I think the heavy lifting in the context of the climate plan comes in the area of buildings because it is so disparate,” Wilkinson told CBC. “There are 16 million residential buildings, most of which will be standing in 2050, most all of which will require deep retrofits.”

Through existing grants and a low interest loan program, Wilkinson said the government’s focus over the next two decades will be helping Canadians undertake the extensive renovations required. 

The document also says homebuilders need to construct more “green and affordable homes from the start” and warns that the use of materials manufactured through processes that emit a lot of carbon — such as cement and steel — could undo much of the sector’s progress in reducing its emissions.

“For residential buildings, Canada will need at least 3.5 million new homes by 2030,” the strategy document said. “However, if built with current practices, using materials containing a significant amount of ’embodied carbon,’ and to base (minimum) building codes and standards, these structures will add up to 18 megatonnes of GHGs to our carbon footprint annually.”

The federal government doesn’t really have many options to change the way homes are built.

The strategy carefully points out that while Ottawa can set standards for federal construction, it’s up to provincial and territorial governments to adopt and implement them.

The strategy does say that Ottawa can leverage its buying and spending power to encourage provinces, territories, municipalities and the building sector to become more green.

The document says that since 2016, the federal government has invested more than $20 billion in green building projects — including the relaunch of the Greener Homes Grant program, which supports low- to medium-income households.

Groups call on government to phase out natural gas

Environmental groups like 350.org and Stand Earth are criticizing the government for targeting heating oil while stopping short of phasing out other forms of fossil fuel home heating.

“The fact that heat pumps play a key role in the Green Buildings Strategy is a big win for people across the country who have been pushing for climate action, but the federal government must go further,” said 350 Canada team lead Atiya Jaffar.

“By neglecting to develop a policy to address natural gas in new buildings, the plan ignores the elephant in the room,” said Stand.earth climate campaigner Lana Goldberg.

The Canadian Gas Association cautioned against calls to phase out fossil fuel heating outright, citing the reliability of heat pumps and the cost of switching to them.

“I think the reality increasingly is, yes, Canadians want to do their part (to reduce emissions) … but you have an affordability crisis that’s at their doorstep today,” said Paul Cheliak, vice-president of strategy and delivery with the Canadian Gas Association.

“I think tempering the momentum a little bit, by looking at the affordability crisis and other things, is a really positive and smart thing to do.”